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AT&T Makes Its Media and Advertising Strategy Clearer

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AT&T acquires Otter Media

AT&T (T) announced on September 5 that it is taking full ownership of digital branding and media company Otter Media. This move signals that the telecom behemoth is moving ahead with its media-based M&A (mergers and acquisitions) strategy despite continued challenges from the Department of Justice (or DOJ).

According to CNBC, “AT&T already owned part of Otter Media and its video assets, but Recode reported in June it was looking to buy out the rest of the company at a valuation of around $1 billion.”

Otter Media would operate under AT&T’s WarnerMedia division, which was created after acquiring Time Warner. Otter Media is one of the leading SVOD (subscription video on demand) providers and has 2.0 million paying subscribers.

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AT&T is buying media assets

AT&T (T) is working toward being a leading operator in the media and advertising space, and it’s been procuring media assets to achieve that goal. It acquired Time Warner for $85.4 billion in a deal that closed in June, although the US government is trying to reverse that merger in court.

AT&T recently completed its acquisition of digital ad platform AppNexus. Otter Media, which AT&T acquired last month, teamed up with other investors to invest $4.7 million in Mars Reel.

The digital ad market is dominated by Alphabet’s (GOOGL) Google and Facebook (FB). According to market intelligence company eMarketer, Google’s digital ad revenues are projected to grow ~14.5% YoY (year-over-year) to $39.9 billion in 2018. Facebook’s US ad revenues are projected to grow ~16.9% YoY to $21.0 billion. Total US digital ad spending is projected to grow ~6.6% YoY to $221.0 billion.

Among AT&T’s competitors, Verizon (VZ) has been a player in the digital ad market after its acquisitions of Yahoo and AOL.

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